Eli Lilly 2012 Annual Report Download - page 51

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39
any future taxable income or tax planning strategies in the jurisdictions associated with these carryforwards
where history does not support such an assumption. Implementation of tax planning strategies to recover
these deferred tax assets or future income generation in these jurisdictions could lead to the reversal of these
valuation allowances and a reduction of income tax expense.
As of December 31, 2012, a 5 percent change in the amount of the uncertain tax positions and the valuation
allowance would result in a change in net income of $46.4 million and $33.8 million, respectively.
LEGAL AND REGULATORY MATTERS
Information relating to certain legal proceedings can be found in Note 15 to the consolidated financial
statements and is incorporated here by reference.
FINANCIAL EXPECTATIONS FOR 2013
Our 2013 financial guidance includes an estimated one-time benefit of $0.07 per share associated with the
research and development tax credit for 2012 that will be recorded in the first quarter of 2013, resulting from
the delay in the enactment of the American Taxpayer Relief Act of 2012. For the full year of 2013, we expect
EPS to be in the range of $4.10 to $4.25. We anticipate that total revenue will be between $22.6 billion and
$23.4 billion. Despite the initial impact of the U.S. Cymbalta patent expiration in the fourth quarter of 2013 and
the loss of the anticipated 15 percent revenue-sharing obligation on worldwide exenatide sales, we expect
overall revenue growth, driven by a portfolio of products including Humalog, Humulin, Cialis, Strattera,
Forteo, Alimta, Cymbalta outside the U.S., Effient, Tradjenta, and Axiron, as well as animal health products. In
addition, significant revenue growth is expected in Japan and the emerging markets, particularly China.
We anticipate that gross margin as a percent of revenue will be approximately 78 percent. Marketing, selling,
and administrative expenses are expected to be in the range of $7.1 billion to $7.4 billion. Research and
development expense is expected to be in the range of $5.2 billion to $5.5 billion. Other—net, (income)
expense is expected to be in a range between $340 million and $490 million of income. Operating cash flows
are expected to be more than sufficient to pay our dividend, complete our previously announced $1.5 billion
share repurchase program, allow for capital expenditures of approximately $900 million, and fund potential
business development activity.
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk
You can find quantitative and qualitative disclosures about market risk (e.g., interest rate risk) in Item 7 at
“Management’s Discussion and Analysis—Financial Condition.” That information is incorporated in this report
by reference.